Motor Vehicle Commission
(As Amended at ARRS, November 12, 2013)
RELATES TO: KRS 190.010-190.990
STATUTORY AUTHORITY: KRS 190.015, 190.020, 190.030, 190.040, 190.058, 190.073
NECESSITY, FUNCTION, AND
CONFORMITY: KRS 190.040(1)(i) requires that a motor vehicle dealer
shall not engage in “false or misleading advertising.” KRS 190.073 authorizes the
Motor Vehicle Commission to promulgate administrative regulations for the
purpose of carrying out the provisions of KRS Chapter 190. This administrative
regulation establishes examples of what constitutes false or misleading advertising[
a motor vehicle dealer from engaging in "false or misleading advertising";
this is the only statutory or regulatory language which attempts to provide any
guideline or standard for dealer advertising. The Motor Vehicle Commission has
received numerous inquiries and complaints concerning advertising by licensees.
It is the objective of this administrative regulation to define certain conduct
which constitutes "false or misleading advertising". KRS 190.073
authorizes the Motor Vehicle Commission to "promulgate appropriate and
reasonable regulations for the purpose of carrying out the provisions of this
chapter." The purpose of this administrative regulation is to provide for
truthful and accurate advertising practices in the sale and lease of motor
vehicles by licensed motor vehicle dealers].
Section 1. Definitions. [
this section:](1) "Advertising" means any oral, written
or graphic statement, whether physical or electronic, which offers
vehicles for sale or lease or that[ which] indicates
the availability of vehicles, including any statements or representation made
in a newspaper, pamphlet, or circular, other publication,
or in[ on] radio or television, or contained in any notice,
handbill, sign, billboard poster, bill catalog, letter, or
(2) “Bait advertising” means:
(a) An alluring but insincere offer to sell or lease a product, to obtain leads to persons interested in buying merchandise of the type advertised and to switch consumers from the advertised product to another product for a higher price or on a basis more advantageous to the dealer; or
(b) Advertising a new motor vehicle at a price that does not include all equipment listed as standard equipment by the manufacturer without disclosing that fact, or failing to disclose any of that equipment for the purpose of advertising a low price and “baiting” the customer into charges above the advertised price.
(3) "Clear and conspicuous" means a statement, representation or term differing from other statements, representations, or terms being made so as to be readily noticeable to the person to whom it is being disclosed either by its size, sound, length of time, color, placement in the ad, or other features.
"Demonstrator” means a vehicle of the current or preceding model
year that has never been the subject of a retail sale, and that has been used
by dealership personnel for demonstrating performance ability.
vehicle” or “official vehicle” means, if so advertised, a vehicle that has been
used exclusively by an executive or executives of the dealer franchiser[
official or executive vehicles": the word "demonstrator" means a
vehicle of the current or preceding model year which has never been the subject
of a retail sale, and which has been used by dealership personnel for
demonstrating performance ability. "Executive" and "official"
vehicles when so advertised shall have been used exclusively by executives of
the dealer’s franchiser. (4) "Bait
advertising" means an alluring but insincere offer to sell or lease a
product, to obtain leads to persons interested in buying merchandise of the
type advertised and to switch consumers from the advertised product to another
product for a higher price or on a basis more advantageous to the dealer. Advertising
a new motor vehicle at a price which does not include all equipment listed as
standard equipment by the manufacturer without disclosing such fact, or failing
to disclose any such equipment for the purpose of advertising a low price and "baiting"
the customer into charges above the advertised price is prohibited. No practice
shall be pursued by the advertiser which will discourage the sale of the
advertised product with the intent and purpose of selling other merchandise instead].
Section 2. A
Licensees] shall not use misleading or bait advertising.
A practice shall not be pursued by an advertiser if the practice will
discourage the sale of the advertised product with the intent and purpose of
selling other merchandise instead.
Section 3. An
Advertisements] for the sale or lease of new
and used vehicles placed by a licensee shall clearly and conspicuously identify
the dealership by including in the text of the advertisement[ either the word
"dealer" or] the business name as it appears on the dealer’s[ dealer]
(1) In a
classified newspaper advertisement[
In classified newspaper
advertisements], the licensee may, as an alternative, use
the word "dealer" in the text of the advertisement.
(2) A new or used motor vehicle dealer advertising the sale or lease of new or used motor vehicles at more than one (1) licensed location shall use in the text of the advertisement the business name for each advertised location as the name appears on the dealer’s license for the locations subject to the advertisement.
A new motor vehicle dealer advertising the sale or lease of new motor vehicles
at more than one (1) licensed location shall
specifically identify the makes of vehicles available at each advertised location.
Section 4. (1) Except as established[
in subsection (2) of this section, if a specific new motor vehicle is
advertised by a dealer as being for sale, that vehicle shall be:
(a) In the possession of the dealer;
(b) Shown; and
(c) Sold as advertised, illustrated, or described at the advertised price and terms, at the advertised address.
(2) The advertisement for the sale or lease of a specific new motor vehicle that is not in stock on the date of the advertisement shall:
"Not in stock";
"Order yours now"; or
Other phrases of similar import that clearly indicate the vehicle is not
available for immediate delivery; and
Shall] Disclose a reasonable estimate of the period of time in
which delivery will be made.
(3) If an advertisement
pertains to one (1) specific vehicle only, this fact shall be disclosed in the
advertisement. Listing a stock number shall be[
Section 5. The following
statements shall not be used in advertising by a dealer, unless the[
statements are absolutely true with no qualifications:
(1) Statements such as:
(a) "Write your own deal";
"Name your own price";
"Name your own monthly payments";
"Appraise your own car”; or
if][ car][ "
or] Statements with similar meaning;[ .]
(2) Statements such as:
(a) "Everybody financed";
"No credit rejected”;
"We finance anyone"; or
Other statements representing or implying that no prospective credit purchaser
will be rejected because of his inability to qualify for credit;[ .]
(3) Statements representing
that no other dealer grants greater allowances for trade-ins, however stated;
(4) Statements implying that because of its large sales volume, a dealer is able to purchase vehicles for less than another dealer selling the same make of vehicles.
Retail advertising shall not state or imply that the dealer:
Is selling vehicles in a manner other than through normal retail channels; or
Has a special relationship or connection to the manufacturer that other dealers
do not have.
Section 7. (1)[
Terms such as "wholesale", "factory sale", "factory
discount", "factory outlet", "factory branch",
and similar terms used in connection with the manufacturer’s name are examples
of terms that imply that a dealer has a special relationship or connection to a
manufacturer that other dealers do not have, and shall be
prohibited in retail advertisements.
Claims such as "first", "largest", "biggest",
shall not be used unless they are valid at the time such claims are made.
(b) If such claims are qualified with regard to area, location, time, or other limitations, upon the direction of the commission, the dealer shall incorporate within the advertisement the terms of such qualification.
Since the amount of trade-in allowance will vary depending on the condition,
model, and age of a buyer’s vehicle, no specific trade-in
amount or range of amounts shall be used in advertising.
An asterisk (*) may be used to give additional information about a word or term.
however,] Use of one (1) or more footnotes or asterisks which,
alone or in combination, contradict, confuse, materially modify,
or unreasonably limit a principal message of the advertisement shall not be
Any disclosure appearing in advertisements shall clearly and conspicuously
feature all necessary information in a manner that can be read and understood
or that[ which] can be heard and understood.
(2) The minimum duration of printed language in a television advertisement shall be five (5) seconds for every three (3) lines.
Section 11. If[
When] a motor vehicle advertisement contains an offer of a discount
on a new vehicle, the amount of the[ such] discount shall
be stated by reference to the actual dollar figure of the manufacturer’s
suggested retail price of the vehicle plus the retail price of dealer-added
The words "free", "gift", or words of
similar import may be used in advertising only if[ when]
the advertiser is offering an unconditional gift.
The manufacturer’s suggested retail price (MSRP) dollar figure of a new motor
vehicle if[ when] advertised in local media by a
manufacturer, distributor, or regional advertisement
council or association shall include all costs and charges for the vehicle
advertised including destination charges if[ when]
those charges are uniform regardless of destination throughout the state; destination
charges subject to variance within the state and dealer preparation charges may
be excluded from the price, if[ such price, provided that]
the advertisement conspicuously states that the[ such]
costs and charges are excluded.
the price of a vehicle is advertised in local media by a licensee, the vehicle
shall be fully identified as to year, make, model, and if
new or used.
addition,] The stated price shall include all charges that[ which]
the customer is required to[ must] pay for the
vehicle, including[ , but not limited to,] "freight"
or "destination charges", "dealer preparation", "dealer
handling", "additional dealer profit", "additional dealer
margin", and "undercoating or rustproofing" if the vehicle is
already so equipped.
(3) The advertised price at which the dealer is advertising a particular motor vehicle shall be the price before consideration for a down-payment, a trade-in allowance, or other similar allowances.
Section 14. If[
Where] the words "list" or "sticker" or words
of similar import are used in a new motor vehicle advertisement, the
words[ they] shall only refer to the actual dollar figure of
the manufacturer’s suggested retail price (MSRP) plus the retail price of dealer-added
Section 15. If[
Whenever] any advertisement relates to a lease, the advertisement
shall clearly and conspicuously disclose that the advertisement is for the
lease of a vehicle.
A dealer offering to sell a demonstrator, program, official,
or executive vehicle shall clearly and conspicuously identify former
(1) A demonstrator[
former use. Demonstrators] shall be offered for sale as such only
by a dealer who holds a valid sales agreement or franchise for[ for]
the sale of the same line make of motor vehicle.
(2) A vehicle[
advertised as an official or executive vehicle[ vehicles]
shall not have been sold or leased to a retail customer prior to the appearance
of the advertisement.
No reduced interest rate on] Motor vehicle financing shall not
be advertised at a reduced interest rate if the cost
thereof would be directly or indirectly borne by the buyer unless the
advertisement discloses that rate shall[ will]
affect the negotiated price of the vehicle to the buyer.
In any action pursuant to[ under] this administrative
regulation, truth shall be an absolute defense.
RAY COTTRELL, Chairman
APPROVED BY AGENCY: August 13, 2013
FILED WITH LRC: August 14, 2013 at 11 a.m.
CONTACT PERSON: Carlos R. Cassady, Executive Director, Kentucky Motor Vehicle Commission, 105 Sea Hero Road, Suite 1, Frankfort, Kentucky 40601, phone (502) 573-1000, fax (502) 564-5487.